Relevant and even prescient commentary on news, politics and the economy.

On Liberty. (And Ohio.)

“We are Liberty students who are disappointed with President Falwell’s endorsement and are tired of being associated with one of the worst presidential candidates in American history,” the statement said. “Donald Trump does not represent our values and we want nothing to do with him. … He has made his name by maligning others and bragging about his sins. Not only is Donald Trump a bad candidate for president, he is actively promoting the very things that we as Christians ought to oppose.”

The Liberty University student manifesto against Trump comes as college Republican groups across the country reconsider support for the candidate. On Tuesday the University of Virginia College Republicans announced that the group voted to rescind its endorsement of his candidacy for president. The chairman of the College Republicans at Hampden-Sydney College, Tanner Beck, posted a statement on Facebook noting that Trump “has gone from simply being an embarrassment to our party, to a potentially permanent stain on our brand and our country.”

Liberty University students protest association with Trump, T. Rees Shapiro and Sarah Pulliam Bailey, Washington Post

I think the most significant part of this is that while it took the sexual-assault and voyeurism revelations of the last week to decide to break with their leaders, they had, apparently in large numbers, concluded long ago that Trump should not become president.  They’d been deeply offended by his maligning of groups and individuals.

There is, in other words, the same chasm in certain respects between millennial evangelicals and other evangelicals as there has been between millennials generally and older people generally.

Even more significant is the dramatic swing in Ohio in the last two weeks among blue-collar traditional Democrats (and also apparently some blue-collar Republicans), away from Trump and toward Clinton.  It has escalated since the disclosure of the Access Hollywood video and continues to gain as more revelations come out.

But the tide there turned with the publication of those three pages from his 1995 federal income tax return, as its dual meaning became clear: Trump suffered yuge business losses because of a series of awful business decisions, and he parlayed those losses into no federal income tax liability under the Tax Code for 18 years.  The revelations which led to actual news media focus on his massive-gifts-to-multimillionaires tax proposal.

Trump is left with his base.  And not much more.  But for some supporters, at Ieast the Rust Belt, the break came with the tax revelation, before the before the videotape was published.  This matters for what happens in Washington after the election.  At least is certainly should.

I renew this suggestion to the Clinton campaign, and suggest it now also to Dem Senate and House candidates.

Tags: , , , , , , , Comments (9) | |

The person whom Clinton should invite as her guest at next week’s debate: Warren Buffett

A major theme of mine in my posts at AB for a while now has been to try to highlight disclosures about Trump that have been overshadowed by others but that are important for more reasons than the most obvious one.

During Sunday’s debate Trump shocked me (and I’m sure, Clinton) when he claimed that billionaire Clinton supporters Warren Buffett and George Soros had used the same tax breaks as he had in carrying over massive business losses from one year to claim massive tax deductions for many years to come—and that Buffett’s and Soros’s losses and consequent deductions were much larger than his own.

Partly, I was stunned because I know that Trump’s ability to use the tax code in that way stems from a combination of depreciations allowed on real estate holdings—something that Trump mentioned at the debate by saying something like “A lot of it is depreciation.  I love depreciation.”

But even more relevant to Trump’s carryover deduction of that one-year $916 million loss onto his federal income tax returns for two years prior and 15 years afterward is that Trump’s holdings apparently are mostly in LLCs, partnerships, and S corporations—the three business structures that under the tax code allow for “pass-throughs” for losses, from the businesses to the individual’s tax liability—or lack thereof by converting business losses into individual ones.  Buffett’s personal portfolio surely is diversified, but his income from ongoing businesses still comes probably mainly from his holdings in Berkshire Hathaway, which is neither an LLC, nor a partnership, nor an S corporation.

But what made me gasp—literally—was that Trump was claiming to have seen Buffett’s and Soros’s individual tax returns.

On Monday Buffett set the record straight. The Washington Post’s Max Ehrehnfrend wrote Monday in a report titled “Donald Trump tried to call out Warren Buffett. He probably didn’t expect this response.”:

In any case, since Trump was able to claim that he was $916 million poorer, the Internal Revenue Service would not have forced him to pay taxes on any income for at least 15 years until he had made up that loss. A loss that is counted against future income is sometimes called a “carry forward.”

Trump said that such maneuvers were common, mentioning several wealthy donors supporting his Democratic rival.

“Many of her friends took bigger deductions,” the Republican nominee said. “Warren Buffett took a massive deduction.”

It was not clear what deduction of Buffett’s Trump meant, but Buffett’s statement Monday made clear he had never counted losses from past years against his personal income.

“I have paid federal income tax every year since 1944, when I was 13. (Though, being a slow starter, I owed only $7 in tax that year,)” Buffett wrote. “I have copies of all 72 of my returns and none uses a carryforward.” …

There are several reasons that Buffett might never have used a carry forward, although he did not provide any details in his statement. It is possible that Buffett, renowned for his acumen as an investor, simply has never lost enough money in one year.

Also, as a shareholder in his corporation, Berkshire Hathaway, Buffett would not be able to count any losses against his personal income because his assets are in a different legal category than Trump’s.

Trump and his allies have implied that there was nothing out of the ordinary about his $916 million loss. Yet the contrast with Buffett is a reminder that the benefits Trump claimed might well have been unavailable to most taxpayers — although, without more information from his returns, it is impossible to know which provisions of the tax code he exploited and how much money they saved him.

As a real estate developer, Trump probably owned his properties through legal entities that would have allowed him to claim losses against his personal income, rather than against corporate income.

Elsewhere I read that based upon the nature of Buffett’s businesses and of Soros’s, it’s extremely unlikely that either of them ever used the tax write-offs that Trump did in computing their individual tax liability.

I know that this isn’t sex tapes—Trump’s or erroneously-allegedly a former Miss Universe’s.  But Trump completely fabricated specific allegations: that he had seen the individual tax returns of two individuals and that they had suffered larger business losses than Trump’s in 1995 and had used those to write off personal income that, even had those business losses occurred, would have been unavailable to them as individual federal income tax deductions.

And it also showed something else that Trump is lying about: that he actually knows the ins and outs of the federal income tax code.  Obviously, he knows even less than I do about it.  Which is saying that he actually knows next to nothing about it, beyond what’s directly relevant to his own income tax liability and that of his businesses’.

So I suggest that Clinton invite Warren Buffett as an honored guess at next week’s debate.  A front-row seat for him would be nice.

Tags: , , , , , Comments (5) | |

Wow. Seriously, Chris Cillizza and Sean Sullivan? Seriously??

Am I misunderstanding (certainly a possibility), or do the Washington Post’s Chris Cillizza and Sean Sullivan write an entire article based on a really obviously ridiculous conflation of two separate concepts: what tax law is, and what tax law should be?

The article, titled “Mitt Romney was right (on taxes),” chastises the public for hypocrisy in believing, on the one hand, by wide poll margins, that people should do whatever they can to legally reduce their taxes as much as possible, yet on the other hand disapproving of politicians (especially wealthy ones) doing exactly that. These writers use two examples: the respective cases of Mitt Romney and Barack Obama, the latter who just released his newly-filed tax returns for last year showing that he and his wife paid federal income taxes at a rate of 18.4%.

About Romney, they write:

The two-time presidential candidate, whose considerable wealth made the release of his tax returns a focal point of the 2012 campaign, insisted that he paid what was required but no more.

“I pay all the taxes that are legally required and not a dollar more,” Romney said at a debate in January 2012 just prior to releasing his 2010 and 2011 returns. “I don’t think you want someone as the candidate for president who pays more taxes than he owes.”

Eighty-five percent of the American public should have agreed with Romney. But, of course, they didn’t. Romney was cast as trying to game the system for the benefit of he and his wealthy friends. In a February 2012 Washington Post-ABC News poll, two in three Americans said Romney did not pay his fair share of taxes (the public was split over the question in the fall). And a majority of voters in the 2012 exit poll said that Romney’s policies would generally favor the rich and he lost that portion of the vote overwhelmingly.

About Obama, they say, “The Drudge Report, a popular conservative-leaning aggregation site, quickly went with a banner expressing incredulity at the 18 percent rate. Conservatives on twitter were similarly disgruntled.”  As if it’s the general public rather than the far-right starve-the-beast crowd that’s shocked.  And as if it’s even clear that the Drudge Report writer’s incredulity is about Obama’s paying only the legally required amount rather than the lowness of the legally required amount.  The headline, which is not attached to a story, best as I can tell, but instead simply links to the Wall Street Journal news report about Obama’s tax return, reads, “Obama only pays tax rate of 18%?”

Well, yes.  That’s what Obama is actively trying to change: the lowness of the federal income taxes paid by the wealthy.

That much is obvious.  Obama campaigned on a promise to raise federal tax revenues obtained from the wealthy.  Romney campaigned on a promise to lower the tax revenues obtained from the wealthy, who are, y’know, jobs creators who took risks.  Risks!  Including, for many of them, such as Mitt and Ann Romney themselves and, especially, their sons, being born into a wealthy family.  Warren Buffett is not a politician, but it’s a safe bet that he paid no more income taxes than he owed under current tax law, even though he has been in the vanguard of high-profile people who openly plead with politicians to raise tax rates for the wealthy and also remove the outrageous loopholes available to them.

It’s also a safe bet–even safer than, say, betting on Berkshire Hathaway stock–that Warren Buffett has never had a retirement-savings account in a Cayman Islands bank that has between $20 million and $120 million (or the deflationary equivalent) in it, achieved almost certainly by stated initial gross devaluation of equities placed into the account.  And that he did not avail himself of the IRS’s 2009 tax amnesty program for people who were shielding income from the IRS in Swiss banks because he did shield income from the IRS in Swiss banks.  Romney likely did both, which probably is why he refused to release to the public tax documents that would dispel those inferences.  The only other reasonably possible motive for his failure to release those documents is that they would have highlighted the outrageousness of legal tax loopholes that Romney did not want to draw attention to–also a possibility, although, I suspect, not the actual, or at least not the predominant, one), but in any event not one that supports these journalists’ characterization of the public’s poll responses as hypocritical.

What’s really remarkable, in my opinion, is that at least one of these two Washington Post political writers, one of them very high-profile–and as a regular reader of their blog, The Fix, I suspect it is Cillizza, the high-profile one, rather than Sullivan–thinks that a poll question using the phrase “pay their fair share of taxes” references not preferred tax policy but instead actual, current tax policy. The poll question almost certainly was intended to reach, and was understood by the poll respondents to be asking, about the voter’s preferred tax law, not about how the voter thinks people should act, by choice, under current, existing tax law.  With the caveat, of course, that most people don’t think wealthy people such as the Romneys should violate tax law, as many, many people who followed the specifics of the Romney-tax-returns controversy last year did conclude.

There is, in other words, nothing even slightly hypocritical in believing that people are morally entitled to avail themselves of legal tax breaks but that tax law should be amended to remove some of those tax breaks, to raise tax rates on the wealthy, to tax investment income at the same or near-same rate as investment income, and to tax large estates.  Or to do at least some of these things.

The belief that the law in its current form does not exact payment of a fair share of tax revenues from the wealthy, and the belief that it’s fine for people to employ current tax law to lower their own taxes, irrespective of their views on what tax policy should be, are not contradictory. Unless, like one or both of these journalists, you think the phrase “fair share of taxes” means two distinct and contrary things at once.  But most people, I’m pretty sure, understand quite well what that phrase addresses.  And it’s only one of those two things, not both.

Tags: , , , , , , Comments (12) | |